In the Arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law and

the North American Free Trade Agreement (Case No. UNCT/14/2)

ELI LILLY AND COMPANY

v.

GOVERNMENTOFCANADA

EXPERT REPORT OF MURRA Y WILSON

Claimant

Respondent

l. INTRODUCTION

l. M y name is Murray Wilson and I reside in the City of Ottawa, Ontario.

2. I confirm that I have no relationship to Eli Lilly and Company or any of its

affiliates.

3. I worked for the Canadian Patent Office for o ver 3 5 years as a patent examiner

and in various other capacities such as the acting Chair of the Patent Appeal Board. Based upon

that experience, I believe that 1 am qualified to provide the factual information and opinions set

out below.

4. During my 35 year career with the Canadian Patent Office I examined and

reviewed thousands of patent applications, including pharmaceutical patents. I have extensive

experience and in-depth knowledge about the Canadian Patent Office practice relating to the

examination and granting of patents during the time period the Strattera and Zyprexa patent

applications were examined and the patents granted (patent 2,209,735 and patent 2,041,113,

respectively ).

5. After graduating from Carleton University in 1971 with a Bachelor ofMechanical

Engineering Degree, I started working in the Canadian Patent Office in 1971 as a patent

examiner in the Mechanical Division, examining patent applications in the material handling

arts.

6. In 1981, I became a senior patent examiner with responsibilities for examining

patent applications that were filed in French.

7. In 1982, I was appointed Assistant to the Commissioner of Patents/Registrar of

Trade-marks.

8. In 1987, I became a project officer in the Policy and Program Planning Branch of

the Canadian Intellectual Property Office. This position had various duties including

responsibility for the formal training of all new patent examiners.

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9. In 1992, I became a member of the Patent Appeal Board. The Patent Appeal

Board reviews the prosecution of patent applications which have been rejected during the patent

examination process and makes recommendations to the Commissioner of Patents as to whether

the examiner' s rejection should be upheld or reversed. If the Commissioner refuses the

application, the patent applicant can appeal to the Federal Court. The Board members were also

responsible for the preparation of conflict awards pursuant to section 43(7) of the Patent Act. 1 In

2006 I became acting Chair of the Patent Appeal Board and remained in that position until I

retired in 2008.

10. I was Chairman of the Patent Agent Examination Board and the Trade-mark

Agent Examination Board from 1994 to 2008. These Boards are responsible for the setting,

marking and administration of examinations that individuals must pass in order to become a

registered patent agent or a registered trade-mark agent. The Patent Agent Examination Board is

constituted in accordance with section 13 of the Patent Rules. 2 The Chair and at least three other

members are employees of the Patent Office and at least five members are patent agents

nominated by the Intellectual Property Institute of Canada.

11. I was delegated by the Commissioner of Patents, in consultation with the Minister

of Industry, to carry out the powers of the Commissioner pursuant to sections 66, 68-69 of the

Patent Act (abuse ofpatent rights)3 from May, 2004 until I retired.

11. INSTRUCTIONS

12. I have been asked to provide testimony about the following matters:

(i) explain the patent examination process at the Patent Office;

(ii) explain the purpose ofthe Manual of Patent Office Practice ("MOPOP")

(iii) explain the guidance in MOPOP provided to patent applicants and patent examiners about the utility requirement for obtaining a patent at the time the Zyprexa patent was granted and review the Zyprexa file wrapper;

1 Patent Act (Canada), R.S.C. 1985, c. P-4, as am., § 43(7) (C-50). 2 Patent Rules (Canada), SOR/96-423 (C-51). 3 Patent Act (Canada) §§ 66, 68-69 (2003) (C-52).

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(iv) explain the guidance in MOPOP provided to patent applicants and patent examiners about the utility requirement for obtaining a patent at the time the Strattera patent was granted and review the Strattera file wrapper.

111. THE PATENT EXAMINATION PROCESS

13. The Patent Office employs a corps of examiners who are selected and hired

based on aptitudes and previous scientific training. All patent examiners hold either an

engineering degree or an honours degree in science, with sorne examiners holding advanced

degrees at the Masters or Ph.D. level.

14. Examiners receive about three months of in-class training and receive course

materials relating to the main requirements for obtaining a patent (e.g. utility). Trainees initially

work under the supervision of senior examiners.

15. During substantive examination, exammers are required and trained to

thoroughly screen and examine applications for conformity with the Patent Act and Patent Rules.

The main tenets of examination are the analysis by the exarniner as to the novelty, utility and

non-obviousness of the claimed invention. During training course rnaterials are provided to

examiners, which included the legal requirements for granting a patent.

16. The examiner also verifies that the description of the invention is sufficient to

allow others to practice the invention. Only patent applications which meet all of the

requirements of the patent legislation are allowed to issue into patents since granted patents are

presumed to be valid under the Patent Act.

17. If the examiner identifies problem areas with any portion of the application, for

exarnple in the specification, drawings, abstract or claims, an examiner' s report is issued. This

report, comrnonly referred to as an Office Action, explains why the application is not compliant.

To the best of my recollection, an Office Action would rarely raise an issue regarding the utility

requirement to obtain a grant of a patent.

18. The applicant is provided with an opportunity to respond to and amend the

application to overcome an examiner's rejection with the caveat that new subject matter cannot

be added to the application. This interaction between the applicant and the Patent Office can

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repeat itself until the examiner decides that the application complies with the Patent Act and the

Patent Rules and allows the application or the examiner rejects the application in an Examiner's

Final Action. Often the examiner will issue no more than two or three Office Actions before

issuing a Final Action. If the examiner allows the application, a notice of allowance is sent to the

applicant ultimately resulting in the grant of a patent by the Commissioner of Patents. The grant

of a patent is not an "initial" grant - there is only one grant of the patent and the grant is

presumed valid by the Patent Act.

19. Rejected applications can be referred to the Patent Appeal Board for a

Commissioner' s Decision. The Patent Appeal Board can make a recommendation to the

Commissioner of Patents to reverse the examiner' s Final Action or to affirm the Final Action.

20. In my experience, the fact that the U.S. or U.K. patent office had granted a

patent to an identical invention was of sorne influence to Canadian patent examiners.

Intemational patent applications filed under the PCT were also easier to review because they

included a search report, which meant the exarniner did not have to spend as much time

searching the prior art.

IV. ROLE OF THE MANUAL OF PATENT OFFICE PRACTICE ("MOPOP'')

21. Patent examination is govemed by the Patent Act and the Patent Rules. The

Canadian Intellectual Property Office's Manual of Patent Office Practice provides guidance to

exammers.

22. Although MOPOP is to be considered solely as a guide, in my experience,

MOPOP recorded the Patent Office's practice and was tantarnount toa rulebook to be followed

by patent examiners and patent agents during the prosecution of applications filed with the Patent

Office.

23. MOPOP was first published in 1979. MOPOP has been revised to reflect

arnendments to the Patent Act and court decisions that impact examination and administrative

procedures. The process of amending MOPOP often involves significant discussions and review

by Department of Justice lawyers and consultation with the patent profession before new court

decisions are incorporated into the Manual.

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24. The MOPOP chapters addressing utility and description- as related to utility-

were revised in 1990, 1996, 1998,2005,2009 and 2010.4

25. There were no changes made to MOPOP with respect to the utility requirement

between 1990 and 1996. As discussed below, significant changes were made to the utility

requirement in the amendments to the 2009 and 2010 MOPOP.

V. UTILITY REQUIREMENTS IN EFFECT AT THE TIME THE ZYPREXA AND

STRA TTERA PATENTS WERE GRANTED

26. In November 1987, Canada started to provide patent protection to pharmaceutical

compounds. Prior to that date, pharmaceuticals were only eligible for product by process patents.

Going forward, the Patent Office evaluated pharmaceutical composition patents under the same

utility standard as other inventions.

27. During my tenure at the Patent Office, there was a low threshold for

establishing utility of a claimed invention. Patent examiners' review of whether an applicant

meet the utility requirement was quite simple. Examiners' scrutiny primarily fell instead on the

novelty and non-obviousness requirements. For utility, the question examiners asked was purely

whether there was reason to doubt that the invention would work. lf in doubt, examiners could

ask for working models. If the claimed invention worked or could work for any particular

purpose, then it had utility. An invention was either useful or it was not. There was no

requirement that an invention have a particular amount ofutility.

28. If the utility of the invention was not apparent, the patent applicant would be

required to disclose how the invention would be useful. 1 was aware of applications that were

denied for lack ofutility, but in these cases the inventions were found inoperable or unworkable.

For instance, patent applications for a machine to burn water, a death ray machine, and a

perpetua! motion machine were rej ected.

29. However, examiners did not consider advantages of the invention that were

stated in the disclosure to be equivalent to the utility of the invention. Examiners would not

4 The chapters ofthe MOPOP from each ofthese years can be found at exhibits C-53 to C-60.

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comb through patent application to identify claims or assertions as to why an invention was

better than previous inventions. They were only looking for any utility, for example if a drug

would be useful to treat schizophrenia or ADHD. There had to be sorne indication of what the

invention would be used for, however, additional benefits of the type frequently described by an

applicant- such as if the drug had fewer side-effects, was easier to manufacture, or could be

taken less often- were not construed as part of the "utility" of the invention. While these

assertions may contribute to the explanation of why the invention is "inventive," they were not

considered in determining whether the invention was useful.

30. Examiners generally would accept credible assertions made by the patent

applicant with respect to the intended utility. Following Monsanto Co. v. Canada

(Commissioner of Patents/, a Supreme Court of Canada case that determined that claims to

untested compounds could be made on the basis of a sound prediction, patent examiners were

instructed to accept credible assertions asto predicted utility. Unless the examiner had reason to

doubt that the invention worked, the inquiry ended there. As a result, it was neither required nor

typical for applicants to pro vide much, if any, data derived from real world use, whether through

clinical data of pharmaceuticals, or through road testing of machines. In sum, there was a low bar

to meeting the utility requirement prior to the 2009 and 201 O changes to MOPOP. In m y

experience sitting on the Patent Appeal Board from 1992-2008, I cannot remember a

pharmaceutical patent that was rejected for lack ofutility.

A. Olanzapine (Zyprexa)

l. MOPOPs in Effect at Time of Zyprexa Patent Examination

31. Eli Lilly filed its patent application for olanzapine (Zyprexa) in April, 1991 and

requested examination in October, 1995. The olanzapine (Zyprexa) patent was granted on July

14, 1998 (patent 2,041,113).

32. The relevant sections ofMOPOP relating to utility when the olanzapine (Zyprexa)

patent was examined was the 1990 MOPOP Chapter 12:

5 [1979] 2 S.C.R. 1108 (C-61).

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12.02.01 An invention must be useful

Section 2 of the Act requires utility as an essential feature of invention. If an invention is totally useless, the purposes and objects of the grant would fail and such grant would consequently be void on the grounds of false suggestion, failure of consideration and having tendency to hinder progress (Northem Electric Co. Ltd. v. Browns Theatres Ltd. (1940) Ex. Cr., (1941) S.C.R.)

12.02.02 Utility must be disclosed

An application for patent must not only describe the invention, but also its operation or use (Section 34(1)). The operation or use of the invention must, of course, show the purpose for which the invention was intended. An invention may have several uses, but it must always have at least one.

The claims must be drafted to an invention having the utility disclosed. If the claims cover only things that have utility other than that disclosed or if they include inoperable and therefore useless embodiments, they are bad (O'Cedar v. Mallory (1956) Ex. C.R. 299).

12.03 PREREQUISITES OF A PATENTABLE INVENTION

Utility, as related to inventions, means industrial value. To be acceptable in the patentable sense, it must be something that will impart industrial value to what is sought to be patented (Northem Electric v. Browns Theatres supra).

In assessing whether subject matter falls within the meaning of the definition of a patentable invention under Section 2 of the Patent Act, the prerequisites established by Canadian jurisprudence and legislation that must be satisfied are, inter alia:

(a) whether the subject matter relates to a useful art (as distinct from a fine art where the result produced is solely the exercise of personal skills, mental reasoning or judgment, or has only intellectual meaning or aesthetic appeal);

(b) whether the subject matter is operable, controllable and reproducible by the means described by the inventor so that the desired result inevitably follows whenever it is worked;

(e) whether the subject matter has practica! application m industry, trade or commerce;

(d) whether it has a licit object in view (Section 27(3));

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(e) whether it is more than a mere scientific principie or abstract theorem (Section 27(3)) and

(f) whether it is beneficia! to the public.6

33. The relevant MOPOP dealing with the description section of the patent when the

olanzapine (Zyprexa) patent was examined was Chapter 9 ofthe 1996 MOPOP. The portions of

that chapter relevant to utility were:

9.01 THE DESCRIPTION

... The description must describe the invention and its operation or use as contemplated by the inventor (subsection 27(3) ofthe Patent Act) ... Under Section 2 of the Patent Act, the invention must have utility. The description should explain at least one use of the invention in sufficient detail to enable a skilled person to use the invention for its intended purpose. If no use can be seen on the basis ofthe description, the application may be rejected for lack ofutility.7

2. Review of Zyprexa File Wrapper

34. I have reviewed the Canadian Patent Office's file wrapper (the examination

history) for patent 2,041,113 (Zyprexa/olanzapine).8

35. On April 1, 1997, the examiner in charge of the application issued the only

Office Action on this application.9 In it she cited two British patents to reject claims 1 to 7 for

lack of novelty. She also rejected sorne claims as being indefinite and she required the applicant

to supply a new title for the application. Finally, she asked for details of the prosecution of the

corresponding United States and European applications.

36. There was no mention of any problems with the way in which Eli Lilly set out

the utility of the invention. On September 5, 1997 the applicant responded to the Office Action

6 Canadian Intellectual Property Office -- Patent Office, Manual of Patent Office Practice, §§ 12.02.01-12.02.02, 12.03 (January 1990) (C-53). 7 Canadian Intellectual Property Office -- Patent Office, Manual of Patent Office Practice, § 9.01 (October 1996) (C-55). 8 File History for patent 2, 041,113 (Zyprexa/olanzapine) (C-62). 9 Office Action re Application No. 2,041,113 (April1, 1997) (C-63).

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and amended the application to satisfy the examiner's objections.10 A Notice of Allowance was

issued in 1998 and the patent was granted. 11

37. Based on my experience, patent examiners will raise all potential concerns or

errors with a patent application in an Examiner's Report. Here, the examiner did not raise any

issues with utility in the Report. Instead, the Report dealt with separate questions of novelty,

indefinite claims, and title. lf the examiner had any questions about utility, those concerns would

have been raised in the Report. The examiner found that the '113 patent application clearly met

the utility requirements.

38. Based on m y independent evaluation of the Zyprexa file wrapper and the '113

patent, Lilly fulfliled MOPOP's requirements for utility existing at the time the patent was

granted.

B. Atomoxetine (Strattera)

l. MOPOPs in Effect at Time of Strattera Patent Examination

39. Eli Lilly filed its patent application for atomoxetine (Strattera) m 1996 and

requested examination in February, 2001Y The atomoxetine (Strattera) patent was granted in

October 1, 2002 (patent 2,209,735)_13

40. The relevant section of MOPOP relating to utility when the atomoxetine

(Strattera) patent was examined was the 1998 MOPOP, Chapter 16:

16.02.01 An Invention Must Be Useful

Section 2 of the Patent Act requires utility as an essential feature of invention. Utility, as related to inventions, means industrial value. lf an invention lacks utility for its described purpose it will result in an invalid patent should it be granted. The use of the invention must be apparent from the description to one skilled in the art.

10 Response to Office Action re Application No. 2,041,113 (September 5, 1997) (C-64). 11 Notice of Allowance re Application No. 2,041 ,113 (March 17, 1998) (C-65). 12 Request for Examination for Application 2,209,735 (Strattera/atomoxetine) (February 27, 2001) (C-66). 13 Patent No. 2,209,735 (C-67).

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16.03 PREREQUISITES OF A PATENTARLE INVENTION

In assessing whether subject matter falls within the meaning of the definition of a patentable invention under Section 2 of the Patent Act, the prerequisites established by Canadian jurisprudence and legislation that must be satisfied are, inter alia:

(a) whether the subject matter relates toa useful art (as distinct from a fine art where the result produced is solely the exercise of personal skills, mental reasoning or judgment, or has only intellectual meaning or aesthetic appeal;

(b) whether the subject matter is operable, controllable and reproducible by the means described by the inventor so that the desired result inevitably follows whenever it is worked;

(e) whether the subject matter has practica} application in industry, trade or commerce and

( d) whether it is more than a mere scientific principie or abstract theorem (Section 27(8) ofthe Patent Act). 14

41. The relevant section of MOPOP relating to the description section of the patent

when the atomoxetine (Strattera) patent was examined was Chapter 9 ofthe 1998 MOPOP. The

portions of that chapter relevant to utility were:

9.01 THE DESCRIPTION

... The description must describe the invention and its operation or use as contemplated by the inventor (subsection 27(3) of the Patent Act) ..... Under Section 2 of the Patent Act, the invention must have utility. The description should explain at least one use of the invention in sufficient detail to enable a skilled person to use the invention for its intended purpose. If no use can be seen on the basis ofthe description, the application may be rejected for lack of utility. 15

2. Review of Strattera File Wrapper

14 Canadian Intellectual Property Office -- Patent Office, Manual of Patent Office Practice, §§ 16.02.01, 16.03 (March 1998) (C-57). 15 Id. § 9.01 (C-56)

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42. 1 have reviewed the Canadian Patent Office's file wrapper (the examination

history) for patent 2,209,735 (Strattera/atomoxetine).16

43 . The examiner in charge of this application did not issue an Office Action. The

Notice of Allowance issued in 2002 and the patent was granted. 17

44. In my experience, patent examiners are trained to raise every concem which

they identify in an Examiner' s Report and do not hesitate to raise concems about patent

applications. lf there was any issue with respect to utility, it would have been raised in an Office

Action. The examiner did not find any problem with the way in which Lilly set out the utility of

the invention.

45. Based on my independent examination ofthe Strattera file wrapper and the '735

patent, Lilly fulfilled MOPOP's requirements for utility at the time the patent was granted. In

particular, MOPOP did not require Lilly to disclose human clinical data completed prior to the

filing ofthe application, such as the Massachusetts General Hospital clinical trial study.

VI. CHANGES TO THE UTILITY REQUIREMENT IN MOPOP AFTER THE

PROMISE UTILITY DOCTRINE

46. Discussion of potential changes to MOPOP regarding the utility requirement

started at the end of my tenure at the Patent Office, around 2007 and 2008. 1 remember it well

because 1 had informal discussions with my colleagues about the suggested changes to the utility

requirement which were a stark contrast to prior patent office practice. Before 1 left the Patent

Office, examiners did not comb through applications to pick out every claim or "promise" of

why an invention was better. Instead, they looked for any utility. This significantly changed,

however, with the 2009 and 2010 MOPOP amendmertts ..

47. Since MOPOP needs to reflect developments in the law, 1 was not surprised to

see the 2009 and 2010 MOPOPs required significant changes to the utility doctrine in light ofthe

court decisions on the promise utility doctrine.

16 File History for patent 2,209,735 (Strattera/atomoxetine) (C-68). 17 Notice of Allowance re Application No. 2,209,735 (March 21 , 2002) (C-69).

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48. The changes made in 2009 and 2010 contained extensive requirements for

utility that did not exist when Eli Lilly applied for its olanzapine (Zyprexa) and atomoxetine

(Strattera) patents. These changes remain in the latest version of MOPOP. For example, the

current version ofChapter 12 ofMOPOP, revised in 2009, contains the following language:

12.08.01 Operability

... Where, however, the inventors promise that their invention will provide particular advantages ( e.g. will do something better or more efficiently or will be useful for a previously unrecognized purpose) it is this utility that the invention must in fact have.

Although an invention need only have one use in order to be patentable, where several uses are promised the applicant must be in a position to establish each of them.

12.08.04c Proper Disclosure

The requirement for proper disclosure means that the person skilled in the art has to, through the specification alone, be provided with sufficient information to understand the basis of the sound prediction and to practice the en tire scope of the claimed invention. Elements of either the factual basis or the sound line of reasoning that form part of the common general knowledge will not, as a general rule, need to be disclosed. Elements that form part of the state of the art could ( depending on the specific circumstances) be properly disclosed merely by referring to the document in which they are contained. Elements known only to the inventors, however, need to be included in the description itself.

12.08.05 Relevant Date

The applicant must be in a position to establish the utility of their invention no later than at their filing date. Consequently, the factual basis upon which either the demonstration or sound prediction are based must necessarily exist as of the filing date. Similarly, if a sound prediction is to be relied upon, the articulable and sound line ofreasoning referred to in 12.08.04 must also existas ofthe filing date.

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18 Canadian Intellectual Property Office -- Patent Office, Manual of Patent Office Practice, § 12.08.01, 12.08.04c, 12.08.05 (Dec. 2009) (C-59).

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Chapter 9 of MOPOP, goveming the description, was amended in 2010 and included the

following language:

49.

9.04.01a Disclosure of the factual basis

The factual basis needed to render the line of reasoning sound must be disclosed. If sorne or all of the facts being relied on are found in another publicly available document, this document must be properly identified. Any necessary facts that are not otherwise publicly available must be included in the description.

9.04.01b Disclosure of the sound line of reasoning

The person skilled in the art must al so appreciate the sound line of reasoning that connects the factual basis to the conclusion that the invention has the promised utility.

Here again, the description must provide whatever explanation is necessary to supplement the common general knowledge of the person skilled in the art so as to permit them, in view of the factual basis provided, to soundly predict that the invention will have the utility proposed.

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According to these amendments, examiners at the Patent Office must look not

only at whether the applicant established one use for the claimed invention, but whether all

advantages described in the disclosure were demonstrated or soundly predicted. Examiners are

now required to closely scrutinize all of the statements in the description of the invention in

assessing utility, which examiners did not do during the time period that the Zyprexa and

Strattera patents were prosecuted and granted. The 2009 and 2010 MOPOP amendments also

now require that applicants relying on sound prediction disclose all evidence of utility in the

description. This limitation on how and when evidence of utility could be presented to the

examiner did not exist at the time the Zyprexa and Strattera patents were prosecuted and granted.

19 Canadian Intellectual Property Office -- Patent Office, Manual of Patent Office Practice, § 9.04.01a-9 .04.01b (Dec. 2010) (C-60).

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VII. CONCLUSION

50. The standard for utility, as set out in MOPOP at the time the Strattera and

Zyprexa patents were examined and granted, was a low bar. At that time the Patent Office only

required that an invention be useful and that one of its uses be disclosed. The examiners of the

Zyprexa and Strattera applications would have been familiar with this standard and there was no

mention of utility as an issue during their examinations. The Zyprexa and Strattera patent

applications met the Canadian Patent Office's requirements as set out in MOPOP on the dates of

the grants.

Signed at the City ofüttawa on September 25,2014

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[Signed]

Attachment A

MURRAY WILSON OTTAWA, ONTARIO, CANADA

EXPERIENCE

1992 TO 2008 CIPO – Patent Appeal Board Acting Chair, 2006-2008.

Member, 1992-2008

- Served as chair of a majority of re-examination boards.

- Responsible for preparing decisions for the Commissioner under section 21.01 of the Patent Act.

- Delegated authority to carry out the powers of the Commissioner under sections 66, 68-69 of the Patent Act (abuse of patent rights).

1994 TO 2008 CIPO – Patent Agent Examination Board Chair, 1994-2008.

The patent agent examination board is responsible for the administration of examinations for registered patent agents.

1994 TO 2008 CIPO – Trade-mark Agent Examination Board

Chair, 1994-2008.

The board is responsible for the administration of examinations for registered trade-mark agents.

1971 TO 1992 CIPO – Patent Office Project Officer, Policy and Program Planning Branch, 1987-1992.

Assistant to the Commissioner of Patents and Registrar of Trade-marks, 1982-1987.

Senior Patent Examiner, 1981-1982.

Patent Examiner, 1971-1981.

EDUCATION

B.S. (MECH. ENG.) Carleton University, Ottawa